Newsletter – May 2013

In this month’s enews we report on agreed and proposed law amongst other issues. Please do get in touch if you would like more detail on any of the articles.

RTI annual schemes and guidance on payment date

HMRC have issued guidance on RTI and annual schemes, including clarification of the requirements and operating annual PAYE schemes in real time.

They have also published guidance for employers on what to do if they have been reporting payments to employees in RTI which do not match with the actual date of payment or with tax periods.

If you would like further help and advice on RTI please do get in touch.

Internet links: HMRC RTI corrections HMRC news

Statutory Residence Indicator

From 6 April 2013 the rules that determine whether an individual is resident in the UK for tax purposes have changed. These rules are known as the Statutory Residence Test (SRT).

For the majority of individuals determining whether or not they are resident in the UK for tax purposes is quite straightforward and under the test their position will not change. However for those with complex circumstances the SRT will provide more certainty about their residence status.

Residence is a complex area and we would be happy to discuss your position with you in more detail.

HMRC are planning to issue a pilot online residence indicator in the next few weeks. The residence indicator is designed to give users an indication of their residence status after answering a few straightforward questions regarding days spent in the UK, where your home is and whether you have family ties here.

Internet link: HMRC SRI

HMRC gather extra £220m from high net worth individuals

HMRC have announced that their High Net Worth Unit, which deals with the tax affairs of 5,800 people with assets in excess of £20m, increased its yield from tax enquiries by 10% in 2012/13 to £220m.

Exchequer Secretary to the Treasury, David Gauke, said:

“HMRC’s High Net Worth Unit provides the specialist attention they require in ensuring the wealthy pay the tax they owe. This Government has reinvested almost £1 billion in HMRC and expects them to deliver almost £22 billion in 2014/15.”

“Since 2010, the unit has raised £582 million, increasing its revenue year on year which, at a time when the Government is focused on reducing the deficit, is delivering real results for the country.”

Internet link: HMRC press release

New Employee Shareholder Status finally law

After much debate the Growth and Infrastructure Act is now law.

One of the clauses contained within the Act introduces a new employee shareholder employment status, under which an employee or new recruit can agree to trade certain employment rights for shares in the company.

The House of Lords finally accepted the clause after the government made a number of concessions. One new requirement is that an offer being made under the new contract contains details of the rights being sacrificed and that the individual receives independent legal advice which will be paid for by the employer.

Internet link: Legislation

The Queen has announced the legislative programme

The Queen’s Speech set out the government’s legislative programme for the 2013/14 Parliamentary session including confirmation that the government plans to introduce an annual £2,000 National Insurance rebate for employers from April 2014.

John Cridland, the CBI Director-General, said:

“Business does not need a raft of new bills at this stage of a Parliament. You cannot legislate your way to economic growth – laws are only ever one piece of the jigsaw.”

“The surprise £2,000 National Insurance rebate in the Budget will give smaller firms the confidence to take on extra staff.”

“Extending the General Anti Avoidance Rule is sensible. No one can condone abusive avoidance schemes which serve no commercial purpose other than the minimisation of tax – even if they are legal.”

Internet links: CBI press release Queen’s Speech

Tax credits renewals and scam emails

Tax credit customers are being reminded by HMRC that they must renew claims by the 31 July deadline or their payments may stop.

Tax credits claimants are also being warned to be vigilant as last year the renewals process triggered more than 22,000 scam or ‘phishing’ emails being sent out by fraudsters in the run up to the renewal deadline.

These emails often advise that an amount of money is due to the claimant and, if they click on a link, they are taken to a fake replica of the HMRC website. They are then asked to provide credit or debit card details or other sensitive information such as passwords. The fraudsters then try to take money from their account.

Nick Lodge, Director General of Benefits and Credits, said:

“HMRC will never ask you to disclose personal or payment information by email. We are committed to your online security but the methods fraudsters use to obtain information are constantly changing, so you need to be alert. Anyone who receives this type of email should send it to”

Tax credits are state benefits which are generally available to lower income families. However, entitlement to the credits is significantly increased where individuals pay for childcare or suffer a drop in normal levels of income perhaps due to incurring trading losses or redundancy.

Individuals who have already claimed tax credits for 2012/13 have to finalise their provisional award, which would have originally been based on their 2011/12 income, and let HMRC know of any changes in their circumstances for 2013/14. This procedure is known as the renewals process and renewals packs should be issued to claimants between 19 April and 28 June 2013. The deadline for the submission of tax credit renewals is generally 31 July 2013.

Claimants need to be aware that the payment of tax credits will stop at the end of July if they have not renewed their applications by that date.

If you need any advice on tax or universal credits please do get in touch.

Internet links: HMRC tax credit deadlines Press release News scam emails

Expenses and Benefits online forms

The forms P11D, and where appropriate P9D, which report benefits and expenses for both employees and directors for the year ended 5 April 2013, are due for submission to HMRC by 6 July 2013.

Employees pay tax on benefits provided as shown on the P11D, either via a PAYE coding notice adjustment or through the self assessment system. In addition, the employer has to pay Class 1A national insurance contributions at 13.8% on the provision of most benefits.

If you would like any help with the forms P11D or the calculation of the Class 1A liability please get in touch.

From April 2013 HMRC have introduced an additional method for employers and agents to report end of year expenses and benefits called ‘Online end of year Expenses and Benefits forms’. These are HMRC produced web based forms. However at present only two of the new online forms are available which deal with the situation where no P11Ds are due or benefits have been fully ‘payrolled’.

HMRC have advised that the rest of the planned online forms are in the final stages of development and should be available in June, prior to the 6 July filing deadline.

Employers who previously used HMRC’s Basic PAYE Tools to create forms P11D, P9D and P11D(b) will need to consider alternative methods for completing these end of year forms as the tools will not provide this facility for the year ended 5 April 2013.

Internet link: HMRC online forms